29 November, 2013
Judgment was handed down earlier this week in the eagerly anticipated case of Mitchell v News Group Newspapers. The case has received a large amount of attention, not only as it arises from the "plebgate" scandal, but because it is a real test of the Court of Appeal's post Jackson position on applications for relief from sanctions.
The below article is a summary of the Judgment with the main focus being on the Court's approach to an application for relief from sanctions under CPR 3.9 and CPR 3.14 which the court of appeal considered to be based on the same principles.
The main focus of the Court was to return to the position as intended by the Jackson reforms and dispel any suggestion of a watering down of those reforms by recent case law. It is specifically stated in the Judgment that "from now on relief from sanctions should be granted more sparingly than previously".
In terms of sanctions imposed, they should apply unless the breach was trivial or there is a good reason for the breach. In considering whether there is a good reason the Court suggests that in short, good reasons are likely to arise from circumstances outside the control of the party in default.
Briefly this satellite litigation arises from Defamation proceedings brought by Mr Mitchell MP following the "plebgate" incident. The matter was listed for a case management and costs budgeting hearing under the Defamation Proceedings Costs Management Scheme. The requirements of that scheme were essentially the same as are now found within CPR 3.14 - the parties were to exchange and lodge costs budgets 7 days prior to the relevant hearing. The one difference being that no sanction was set out within the scheme. The Claimant's failed to comply with the order, only lodging their budget on the day prior to the hearing.
The Judge at the case management hearing had to consider what sanction if any should be applied for a failure to comply with the practice direction. In deciding the sanction to be imposed the Judge had regard to the new CPR 3.14, by analogy, in considering what was a proportionate sanction. The Judge imposed the sanction which is now mandatory under CPR 3.14:
"Unless the Court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable Court fees."
The matter was, however, listed for a further hearing to consider the Claimant's application for relief from sanctions. In considering the Claimant's application the Judge had regard to the new overriding objective. As part of dealing with cases justly the court must ensure cases are dealt with at proportionate cost and so as to ensure compliance with rules, order and practice directions.
It was noted that in the present case there had been a failure by the Claimant's Solicitors on two counts:
1) A failure to engage in discussions with the Defendant as to budgets
2) A failure to file a budget 7 days prior to the hearing
It was noted by the Judge that the Claimant's Solicitors were "stretched very thin in terms of resources" with various absences but that this was not unusual and such explanations carry even less weight post-Jackson. There was no evidence presented of any particular prejudice to the Claimant as a result of the previous order and whilst it was obvious that the sanction was "something of a windfall" for the Defendant "that is the way with sanctions". Permission to appeal was, however, granted.
The matter arrived before the Court of Appeal. The appeal was essentially two-fold:
1) Was the Judge entitled to be guided by the new CPR 3.14 given that it was not directly
applicable to the case?
2) An appeal against the decision to refuse to grant relief from sanctions in respect of the failure to
the costs budget.
The first limb was quickly dismissed, the Judge was perfectly entitled to consider and be guided by CPR 3.14 as this represented the considered view of the Civil Procedure Rule Committee as to what constituted a proportionate sanction for such a breach.
The second limb was dealt with in more detail and provides a good illustration of the Court's approach to the rules and more specifically to an application for relief from sanctions under both CPR 3.9 and CPR 3.14 post-Jackson.
In reviewing this Judgment it is perhaps useful to consider the position in relation to CPR 3.9. Prior to the Jackson reforms CPR 3.9(1) contained the often recited list of factors which a Court and applicant were required to work through in an almost 'tick-box' exercise when considering an application for relief from sanctions:
"On an application for relief from any sanction imposed for failure to comply with any rule, practice direction or Court order the Court will consider all the circumstances including -
(a) the interests of the administration of justice;
(b) whether the application for relief has been made promptly;
(c) whether the failure to comply was intentional;
(d) whether there is a good explanation for the failure;
(e) the extent to which the party in default has complied with other rules, practice directions, court orders and any relevant pre-action protocols;
(f) whether the failure to comply was caused by the party or his legal representative;
(g) whether the trial date or the likely trial date can still be met if relief is granted;
(h) the effect which the failure to comply had on each party; and
(i) the effect which the granting of relief would have on each party.
Following the Jackson reforms CPR 3.9(1) is as follows:
"On an application for relief from any sanctions imposed for failure to comply with any rule, practice direction or court order the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need -
(a) For litigation to be conducted efficiently and at proportionate cost; and
(b) To enforce compliance with rules, practice directions and orders."
Jackson noted that this new wording does not preclude the court taking into account all of the matter listed in the previous 3.9(1), however it does simplify the rule and avoids the need to "embark upon a lengthy recitation of the factors". This was on the back of earlier, often quoted, comment by Jackson that the "Courts at all levels have become too tolerant of delays and non-compliance with orders".
This was reiterated by the master of the rolls in the 18th implementation lecture on the Jackson reforms when he said "the tougher, more robust approach to rule-compliance and relief from sanctions is intended to ensure that justice can be done in the majority of cases."
In the present case the Court endorsed this approach and were keen to note the importance of proportionality. Here, had the Claimant filed a costs budget at the time of the first hearing the budgets would have been set and matters progressed. As it was the hearing was adjourned and further Court time was made available for the adjourned hearing to hear the Claimant's application. This illustrates the importance of the Court having regard to the needs and interests of all Court users when case managing an individual case.
The Court went on to give guidance as to how the new approach for relief from sanctions should be applied in practice. The starting point should be to consider the nature of the non-compliance. If this can be regarded as trivial then the Court will usually grant relief provided the application was made promptly. In that regard some examples were given - where there has been a failure of form rather than substance or where a party has narrowly missed a deadline but has otherwise fully complied with the terms of an order.
If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the Court to grant relief. If there is a good reason for the default then the Court will be likely to grant relief. Again some examples were given - where the party or his Solicitor suffered from a debilitating illness or accident, merely overlooking a deadline due to overwork or otherwise is unlikely to be a good reason. Essentially good reasons are likely to be things outside the control of the parties.
It was further noted that applications for an extension of time made prior to the time having lapsed will always be looked upon more favourably than applications for relief after the event.
In terms of the sanction imposed by CPR 3.14 for a failure to file a costs budget the sanction is set out within the rules "unless the Court order otherwise". In deciding whether to order otherwise the Court suggested that the principles are the same as those when considering an application under CPR 3.9 as set out above.
The Court emphasised that "from now on relief from sanctions should be granted more sparingly than previously".
Interestingly the Court in the present case also took the opportunity to provide some words of warning to the Judiciary. They referred to the recent cases of Ian Wyche v Careforce Group Plc  and Raayan Al Iraq Co Ltd v Trans Victory Marine Inc .
The Wyche case involved an application for relief under CPR 3.9 which was allowed on the basis that the breaches were "unintentional and minor failings in the course of diligently seeking to comply with the order". The Court in the present case was quick to highlight that "well-intentioned incompetence, for which there is no good reason, should not usually attract relief from a sanction unless the default is trivial".
In the Raayan Al Iraq Co matter the Judge "reluctantly" applied the old CPR 3.9 checklist when considering an application. In that regard the Court here stated that whilst, depending on the case, it may be appropriate to consider some (or even all) of those factors the most important must be the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules, practice directions and orders.
The appeal here was accordingly refused. Firstly the Court were keen to point to Mannion v Ginty  where it was said that "it is vital for the Court of Appeal to uphold robust case management decisions made by first instance judges." In this case the Judge at first instance was right to recognise that the emphasis of the rules has now changed and her Judgment was accordingly upheld. The defaults by the Claimant's Solicitors here were not trivial and there had been no good excuse provided for them.
This Judgment really represents a return to what most practitioners envisaged to be the case post-Jackson. The Court effectively acknowledges that recent reported decisions, particularly of the High Court, have sought to water down the position and the Court of Appeal are clearly keen to ensure this doesn't happen.
Going forwards any applications for relief from sanctions under either CPR 3.9 or CPR 3.14 for breaches which are considered more than merely trivial and which are without good reason are likely to be met with very little sympathy by the Court and it therefore underlines the importance of compliance from the outset with the rules, practice directions and court orders. Where compliance, particularly in terms of time limits, proves impossible a pre-emptive application to extend a deadline is likely to be met with more sympathy than a post-breach application.
For a full copy of the Judgment see here - http://www.judiciary.gov.uk/Resources/JCO/Documents/Judgments/andrew-mitchell-mp-news-group-newspapers-ltd-27112013.pdf